Industry Market Trends

Corporate Social Responsibility: Are Companies Doing the Right Thing for the Wrong Reasons?

Jan 03, 2013

A new report reveals that the CSR efforts of many companies, like those of Apple, are not always altruistically driven. Credit: Yutaka Tsutano.

The idea of corporate social responsibility has come a long way since the term became common in the late 1960s and early 1970s. By now, most companies understand and accept the importance of the "triple bottom line." But as a fully integrated corporate function, CSR is still relatively new.

Paul Klein, founder of CSR consulting firm Impakt recently wrote in Forbes that, "Every business, in every sector, of every size has a social purpose." He argues that, "Social change isn't the responsibility of business, it is the result of business."

A research report by New York University student Julia Bonner and Professor Adam Friedman finds otherwise. The report looks at the state of CSR in 77 Fortune 1000 companies, and asks several important questions about the influence and motivation behind CSR. The research shows a shocking focus on the importance of the opinions and direction from top executives within an organization. More so, it seems that many companies are doing the right thing for the wrong reasons.

According to poll results, environmental issues top the list as the most important focus for CSR efforts (96 percent), followed by health issues (68 percent), education (59 percent) and human rights (55 percent). This isn't very surprising, especially as the world increasingly invests in greener energy and cleaner technologies.

What is surprising is the heavy hand that C-suite executives seem to have in CSR decisions and activities. When asked, more than half (56 percent) of respondents say that top executives and/or the board of directors were very involved in setting CSR strategies. Furthermore, 82 percent state that many CSR decisions are made at this level, making them the primary influencers, more so than legal (51 percent) and public relations (45 percent) staff.

But what's distressing is that the opinions of C-suite executives are the single-most important measure of CSR efforts (86 percent). This outweighs even those of customers (73 percent) and investors (69 percent).

The reason why can be found in the motivation for CSR activity. Reputation makes the top of the list, with 88 percent listing it as a key motivator. However, competitive positioning is not far behind (71 percent), and more than half (56 percent) admit that profitability was a key driver. Approximately two-thirds (67 percent) believe that not engaging in CSR activity would have a negative effect on the company's reputation. This seems to imply the CSR is less about giving back to the world than about keeping up appearances.

The organization Corporate Watch argues that CSR is often used to "greenwash the company's image, to cover up negative impacts by saturating the media with positive images of the company's CSR credentials." Likewise, companies like Apple tend to use CSR as a reaction to criticism, particularly when dollars are at stake, as opposed to an interwoven corporate strategy. The company has done this on multiple occasions relating to controversy of labor abuse at the Foxconn factory plant in China where products like the iPhone and iPad are assembled. Similarly, in June 2012, Apple suddenly removed itself from the green technology certification program EPEAT, only to return a few weeks later as governments and corporate accounts threatened to cancel orders as a result of the decision.

For many companies, it would seem that corporate social responsibility is more like a corporate social burden. So while CSR will continue to become an integrated part of the way businesses operate, it seems we are a quite a way off before they do so for the right reasons.